Despite posting a huge revenue gain and raising its full-year outlook for the third consecutive quarter, Take-Two Interactive's share price has fallen by almost ten percent.

Yesterday it seemed like good news all around for publisher Take-Two Interactive. The company announced that its year-over-year revenues for the third quarter had jumped from $405 million to $1.86 billion, it raised its full-year outlook for 2014 to $2.35 to $2.38 billion, it had record-setting results from its NBA 2K14 and Borderlands franchises, and its flagship title, Grand Theft Auto, proved as popular as ever over the holidays, with GTA V shipping 32.5 million copies.

But success doesn't always equate to success, and so it is that despite what appeared to be a very positive financial report, Take-Two's share price has fallen nearly ten percent, closing Monday at $18.90 and then opening Tuesday at $17.25, before sliding further still to $17.06 at the time of writing. According to The Street, the problem is that Take-Two's guidance for the fourth quarter fell below analysts' expectations; Take Two called for earnings between break-even and ten cents per share with quarterly revenues of $170 to $200 million, while analysts were looking for 13 cents per share and $219.2 million in revenue. That shortfall was enough to drive the share price down significantly.

In other news, I do not and probably never will understand how the stock market works.

The stockmarket works by telling a corporation you must increase your profits every quarter or else. So corporations find ways to do this and their stock prices rise and people buy/sell and generally make money on the dividends and or the difference of when they bought/sold the stock. All the while the pressure on the corporation to preform in the short term (quarter to quarter) drives them to make stupid decisions like cutting crucial staff, paying their staff shit overworking their staff, treating their customers like shit etc.

Then eventually this causes a collapse and their stock prices drop and if the company is still alive it starts slowly rebuilding until it reaches critical mass again. The same is true for the mega corporations out there except it happens with in smaller sections of their company. A specific product or division etc.

Sometimes though this happens to a particularly large entity or even a whole market which causes a huge collapse and a recession and we all suffer and then bail out wallstreet and then they go right back to doing that again.

synobal:The stockmarket works by telling a corporation you must increase your profits every quarter or else. So corporations find ways to do this and their stock prices rise and people buy/sell and generally make money on the dividends and or the difference of when they bought/sold the stock. All the while the pressure on the corporation to preform in the short term (quarter to quarter) drives them to make stupid decisions like cutting crucial staff, paying their staff shit overworking their staff, treating their customers like shit etc.

Then eventually this causes a collapse and their stock prices drop and if the company is still alive it starts slowly rebuilding until it reaches critical mass again. The same is true for the mega corporations out there except it happens with in smaller sections of their company. A specific product or division etc.

Sometimes though this happens to a particularly large entity or even a whole market which causes a huge collapse and a recession and we all suffer and then bail out wallstreet and then they go right back to doing that again.

This description is more than appreciated. Thank you. :)

To OP: I was as flummoxed as you were in regards to how higher profits = fall in stock.

synobal:The stockmarket works by telling a corporation you must increase your profits every quarter or else. So corporations find ways to do this and their stock prices rise and people buy/sell and generally make money on the dividends and or the difference of when they bought/sold the stock. All the while the pressure on the corporation to preform in the short term (quarter to quarter) drives them to make stupid decisions like cutting crucial staff, paying their staff shit overworking their staff, treating their customers like shit etc.

Then eventually this causes a collapse and their stock prices drop and if the company is still alive it starts slowly rebuilding until it reaches critical mass again. The same is true for the mega corporations out there except it happens with in smaller sections of their company. A specific product or division etc.

Sometimes though this happens to a particularly large entity or even a whole market which causes a huge collapse and a recession and we all suffer and then bail out wallstreet and then they go right back to doing that again.

This description is more than appreciated. Thank you. :)

To OP: I was as flummoxed as you were in regards to how higher profits = fall in stock.

Basically you have to remember stock price reflects how well people expect the company to do, not how well it is doing. "Analysts" said Take two should of made more but they didn't so the stock price goes down because it was reflecting performance that never happened. It's Gambling just ya know legal and barely taxed and some might argue useful.

I've started investing, and I told the guy that I wanted him to do something sacrilegious: "Don't care about next quarter's profit margins; care about them in 100 quarters."

I distinctly remember Apple announcing that they sold 5 million new iPhones the week after the 4 or 5 came out. I laughed when I heard their stock went down. Most companies would die to have those sales numbers. Apparently, they were expected to sell 6 million. Go figure.

Every time I hear something about the stock market, the more it's hard to avoid the feeling that it's stupid.

They've made record sales on games, and their revenues are through the roof, but the value of their stock went down because their revenue didn't go far enough through the roof. If that's not proof of a dumb system, I don't know what is.

It's not about the profits; it's about trusting people... who predict profits.

Or some other nonsense you'd hear in a movie. This is why I won't bother to be an analyst (take out the "yst" and what do you get?) any time in the foreseeable future. These investors are so greedy that they sell at the slightest hint of failure.

It's not THAT complicated. Stock is an investment. The worth of an investment is measured not by its current value, but by its expected value. Since the stock is priced at its expectation, failing that expectation will drop the price. The fact that the value of the company increased (just not enough) doesn't change this, because the price already reflected the expectation that it was going to increase more.

synobal:The stockmarket works by telling a corporation you must increase your profits every quarter or else. So corporations find ways to do this and their stock prices rise and people buy/sell and generally make money on the dividends and or the difference of when they bought/sold the stock. All the while the pressure on the corporation to preform in the short term (quarter to quarter) drives them to make stupid decisions like cutting crucial staff, paying their staff shit overworking their staff, treating their customers like shit etc.

Then eventually this causes a collapse and their stock prices drop and if the company is still alive it starts slowly rebuilding until it reaches critical mass again. The same is true for the mega corporations out there except it happens with in smaller sections of their company. A specific product or division etc.

Sometimes though this happens to a particularly large entity or even a whole market which causes a huge collapse and a recession and we all suffer and then bail out wallstreet and then they go right back to doing that again.

This description is more than appreciated. Thank you. :)

To OP: I was as flummoxed as you were in regards to how higher profits = fall in stock.

Basically you have to remember stock price reflects how well people expect the company to do, not how well it is doing. "Analysts" said Take two should of made more but they didn't so the stock price goes down because it was reflecting performance that never happened. It's Gambling just ya know legal and barely taxed and some might argue useful.

Gotta love a system based completely on hearsay. Great grounds to base peoples livelihoods on. :D

its just the speculators moving out. at release of gta 5 speculators bought stock expecting it to raise. it has risen, now they dumepd the stock back into market, coutned profits and went on to speculate on another company. this happens all the time and in no way reflect company real value or actual investors/shareholders opinion. while legally said speculators are shareholders for the time being, their only intereste is till sell the stock soon at as much as they soon and not the company itself. heck, half of them probably dont even know that Take-Two make games, they only see its numbers rising buy shares, then sell later. sometimes they losoe money too but thats considered perfectly normal.

praetor_alpha:I've started investing, and I told the guy that I wanted him to do something sacrilegious: "Don't care about next quarter's profit margins; care about them in 100 quarters."

I distinctly remember Apple announcing that they sold 5 million new iPhones the week after the 4 or 5 came out. I laughed when I heard their stock went down. Most companies would die to have those sales numbers. Apparently, they were expected to sell 6 million. Go figure.

Yeah, that's what actual investing into stocks should be about: you believe in a company, so you invest in their project for a length of time.